Question

You have a ​$102000 portfolio comprising 16 stocks. You trade each stock five times this year and each time you​ trade, you pay about ​$30 in commissions and spread. You have no special​ knowledge, so you earn only the average market return of 14​% on your investments. How much lower will your total return be because of your​ trades?

Answer 1

My total return is lower 1.05% because of my trades

Step-by-step explanation:

The total commission and spread I have to pay for trading five times in year is $150 (= $30 x 5)

The total return on the portfolio of $102,000 is $14,280 =(14%*$102,000)

So the total commission and spread / the total return = $150/$14.280 = 1.05%